Which of the Following Statements Is CORRECT

question 129

Multiple Choice

Which of the following statements is CORRECT?

• A) Although short-term interest rates have historically averaged less than long-term rates, the heavy use of short-term debt is considered to be an aggressive strategy because of the inherent risks associated with using short-term financing.
• B) If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt.
• C) Net working capital is defined as current assets minus the sum of payables and accruals, and any decrease in the current ratio automatically indicates that net working capital has decreased.
• D) If a company follows a policy of "matching maturities," this means that it matches its use of short-term debt with its use of long-term debt.
• E) Net working capital is defined as current assets minus the sum of payables and accruals, and any increase in the current ratio automatically indicates that net working capital has increased.

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Definitions:

Stare Decisis

The judicial method of resolving disputes by using established cases as a reference.

Articles of Confederation

The first constitution of the United States, ratified in 1781, which established a weak federal government prior to the adoption of the U.S. Constitution.

National Government

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